The reason for the substantial increase in the company's revenue is mainly due to the substantial growth in the wind power business, in which the sales revenue of heavy machinery castings (mainly wind power planetary rack products) reached 353 million yuan, an increase of 143% over the same period last year. The sales revenue of power station iron castings reached 375 million yuan, an increase of 422% over the same period last year. Due to the continuous decline in bidding prices for power plant iron castings related to wind power, the gross profit margin decreased by 7 percentage points, and the gross profit margin of traditional business power plant steel castings decreased by 1.2 percentage points due to the decline in capacity utility. as a result, the overall gross profit margin decreased by 5 percentage points, and the growth rate of net profit was much lower than that of income. We believe that the biggest factor affecting the company's gross profit margin in the short term does not come from the price of raw materials upstream, but from the overall downward movement of bidding prices in the downstream wind power industry. at present, the price of wind power-related business is still likely to decline in the short term, so we expect the company's overall gross profit margin to maintain the 2009 level in 2010.
The company announced in November last year that it will gradually reduce the volume of related transactions in the next two years, which is expected to be no more than 750 million yuan in 2010 and 350 million yuan in 2011, then the company will vigorously expand its customers except Sinovel within two years. Wind power sales revenue is expected to continue to grow. From the distribution of orders-on-hand disclosed in the annual report, it is not difficult to see that the order for iron castings in power station is 1.241 billion yuan, an increase of 148.69% over the same period last year, and the proportion of wind power business will continue to increase in the next two years.
We estimate that the EPS from 2010 to 2012 will be 0.92 yuan, 1.14 yuan and 1.36 yuan respectively, corresponding to 26 times, 21 times and 17 times of PE.
